Silver
Volatile Returns: Commodity Investing Through Miners and Explorers
Volatile Returns: Commodity Investing Through Miners
Investors consider gold and silver as safe haven investments. But the companies that produce gold and silver often offer volatile returns, creating opportunities for astute investors.
Volatility is a double-edged sword, particularly when it comes to commodity investing. During the good times, it can create skyrocketing returns. But during bad times, it can turn ugly.
Todayโs infographic comes to us from Prospector Portal, and shows how investing in precious metals equities can outperform or underperform the broader metals market.
Capitalizing on Volatility: Timing Matters
Just like most investments, timing matters with commodities.
Due to the complex production processes of commodities, unexpected demand shocks are met with slower supply responses. This, along with other factors, creates commodity supercyclesโextended periods of upswings and downswings in prices.
Investors must time their investments to take advantage of this volatility, and there are multiple ways to do so.
Three Ways to Invest in Commodities
There are three primary routes investors can take when it comes to investing in commodities.
Investment Method | Benefits | Limitations |
---|---|---|
Direct physical investment |
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Commodity futures |
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Commodity-related equities |
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Among these, commodity-related equities offer by far the most leverage to changes in prices. Letโs dive into how investors can use this leverage to their advantage with volatile metal prices.
The Fundamentals of Investing in Mining Equities
When it comes to commodity investing, targeting miners and mineral exploration companies presents fundamental benefits and drawbacks.
As metal prices rise, the performance of mining companies improves in several waysโwhile in deteriorating conditions, they do the opposite:
Category | Rising Commodity Prices | Falling Commodity Prices |
---|---|---|
Outlook | - Improved outlook | - Deteriorated outlook |
Stock Price Movement | - Equity growth | - Equity decline |
Dividend Payouts | - Increased dividends | - Decreased dividends |
Financial Performance | - Increased earnings | - Decreased earnings |
With the right timing, these ups and downs can create explosive opportunities.
Mining companies, especially explorers, use these price swings to their advantage and often produce market-beating returns during an upswing.
But how?
The Proof: How Mining Equities React to Metal Prices
Not only do price increases translate into higher profits for mining companies, but they can also change the outlook and value of exploration companies. As a result, investing in exploration companies can be a great way to gain exposure to changing prices.
That said, these types of companies can generate greater equity returns over a shorter period of time when prices are high, but they can also turn dramatically negative when prices are low.
Below, we compare how producers and exploration companies with a NI-43-101 compliant resource perform during bull and bear markets for precious metals.
All figures are in U.S. dollars unless otherwise stated.
Mining Company | Company Stage | Primary Metal Produced | Market Cap. Oct 31, 2019 | Market Cap. July 29, 2020 | Bull Market Performance (Nov. 1, 2019-July 29, 2020) | Bear Market Performance (Jan 02 โ Dec 31, 2018) |
---|---|---|---|---|---|---|
Banyan Gold | Exploration/ Development | Gold | $6M | $40M | 500% | -44% |
Renforth Resources | Exploration | Gold | $8M | $10M | 11% | -10% |
Auryn Resources | Exploration | Gold, Copper | $181M | $330M | 60% | -39% |
Wesdome Gold Mines Ltd. | Production | Gold | $1,104M | $1,885M | 68% | 110% |
Monarch Gold | Exploration/ Development | Gold | $57M | $148M | 139% | -23% |
Red Pine Exploration | Exploration | Gold | $13M | $22M | 29% | -55% |
Revival Gold Inc. | Exploration/ Development | Gold | $27M | $74M | 113% | 5% |
Erdene Resource Development | Exploration/ Development | Gold | $36M | $111M | 222% | -56% |
Endeavor Mining Corp. | Production | Gold | $2,622M | $5,874M | 54% | -13% |
Yamana Gold Inc | Production | Gold | $4,572M | $8,279M | 87% | -22% |
During the bear market period, the price of gold declined by 2.66%, and despite engaging in exploration activity, most companies saw a slump in their share prices.
In particular, exploration companies, or juniors, took a heavier hit, with returns averaging -31.66%. But even during a bear market, a discovery can make all the differenceโas was the case for producer Wesdome Gold Mines, generating a 109.95% return over 2018.
- Average returns for gold producers including Wesdome: 24.83%
- Average returns for gold producers excluding Wesdome: -17.65%
During the bull market period for gold, gold mining companies outperformed the price of gold, with juniors offering the highest equity returns averaging 153.43%. Gold producers outperformed the commodity market, the value of their equities increased 69.61%โless than half of that of exploration companies.
Silver: Bears vs Bulls
Similar to gold mining companies, performances of silver producers and explorers reflected the volatility in silver prices:
Company | Company Stage | Primary Metal Produced | Market Cap. Oct 31, 2019 | Market Cap. July 29, 2020 | Bull Market Performance (Nov. 1, 2019-July 29, 2020) | Bear Market Performance (Jan 02 โ Dec 31, 2018) |
---|---|---|---|---|---|---|
Silvercrest Metals | Exploration | Silver | $694M | $1,449M | 78% | 117% |
Pan American Silver | Production | Silver | $2,973M | $10,550M | 125% | 1% |
Golden Minerals | Exploration | Silver | $30M | $80M | 80% | -42% |
Americas Gold and Silver | Production | Silver | $335M | $482M | 10% | -56% |
Dolly Varden Silver Corp. | Exploration | Silver | $28M | $74M | 152% | -32% |
Endeavour Silver | Production | Silver, Gold | $458M | $837M | 72% | -10% |
During the bear market period for silver, its price decreased by 9.8%. Explorers and producers both saw a dip in their share prices, with the equity of silver producers decreasing by 21.63%.
However, the discovery of a high-quality silver deposit again made the difference for SilverCrest Metals, which generated a 116.85% return over the year.
- Average returns for silver exploration companies including SilverCrest: 8.32%
- Average returns for silver exploration companies excluding SilverCrest: -27.86%
On the other hand, during the bull market period, the price of silver increased by 34.33%. Silver exploration companies surpassed the performance of the price of silver.
- Average returns for silver producers: 69.04%
- Average returns for silver exploration companies: 95.36%
The potential to generate massive returns and losses is evident in both cases for gold and silver.
The Investment Potential of Exploration
Mining equities tend to outperform underlying commodity prices during bull markets, while underperforming during bear markets.
For mining exploration companies, these effects are even more pronouncedโexploration companies are high-risk but can offer high-reward when it comes to commodity investing.
To reap the rewards of volatile returns, you have to know the risks and catch the market at the right time.
Copper
Mapped: Solar Power by Country in 2021
In 2020, solar power saw its largest-ever annual capacity expansion at 127 gigawatts. Here’s a snapshot of solar power capacity by country.

Mapped: Solar Power by Country in 2021
This was originally posted on Elements. Sign up to the free mailing list to get beautiful visualizations on natural resource megatrends in your email every week.
The world is adopting renewable energy at an unprecedented pace, and solar power is the energy source leading the way.
Despite a 4.5% fall in global energy demand in 2020, renewable energy technologies showed promising progress. While the growth in renewables was strong across the board, solar power led from the front with 127 gigawatts installed in 2020, its largest-ever annual capacity expansion.
The above infographic uses data from the International Renewable Energy Agency (IRENA) to map solar power capacity by country in 2021. This includes both solar photovoltaic (PV) and concentrated solar power capacity.
The Solar Power Leaderboard
From the Americas to Oceania, countries in virtually every continent (except Antarctica) added more solar to their mix last year. Hereโs a snapshot of solar power capacity by country at the beginning of 2021:
Country | Installed capacity, megawatts | Watts* per capita | % of world total |
---|---|---|---|
China ๐จ๐ณ | 254,355 | 147 | 35.6% |
U.S. ๐บ๐ธ | 75,572 | 231 | 10.6% |
Japan ๐ฏ๐ต | 67,000 | 498 | 9.4% |
Germany ๐ฉ๐ช | 53,783 | 593 | 7.5% |
India ๐ฎ๐ณ | 39,211 | 32 | 5.5% |
Italy ๐ฎ๐น | 21,600 | 345 | 3.0% |
Australia ๐ฆ๐บ | 17,627 | 637 | 2.5% |
Vietnam ๐ป๐ณ | 16,504 | 60 | 2.3% |
South Korea ๐ฐ๐ท | 14,575 | 217 | 2.0% |
Spain ๐ช๐ธ | 14,089 | 186 | 2.0% |
United Kingdom ๐ฌ๐ง | 13,563 | 200 | 1.9% |
France ๐ซ๐ท | 11,733 | 148 | 1.6% |
Netherlands ๐ณ๐ฑ | 10,213 | 396 | 1.4% |
Brazil ๐ง๐ท | 7,881 | 22 | 1.1% |
Turkey ๐น๐ท | 6,668 | 73 | 0.9% |
South Africa ๐ฟ๐ฆ | 5,990 | 44 | 0.8% |
Taiwan ๐น๐ผ | 5,817 | 172 | 0.8% |
Belgium ๐ง๐ช | 5,646 | 394 | 0.8% |
Mexico ๐ฒ๐ฝ | 5,644 | 35 | 0.8% |
Ukraine ๐บ๐ฆ | 5,360 | 114 | 0.8% |
Poland ๐ต๐ฑ | 3,936 | 34 | 0.6% |
Canada ๐จ๐ฆ | 3,325 | 88 | 0.5% |
Greece ๐ฌ๐ท | 3,247 | 258 | 0.5% |
Chile ๐จ๐ฑ | 3,205 | 142 | 0.4% |
Switzerland ๐จ๐ญ | 3,118 | 295 | 0.4% |
Thailand ๐น๐ญ | 2,988 | 43 | 0.4% |
United Arab Emirates ๐ฆ๐ช | 2,539 | 185 | 0.4% |
Austria ๐ฆ๐น | 2,220 | 178 | 0.3% |
Czech Republic ๐จ๐ฟ | 2,073 | 194 | 0.3% |
Hungary ๐ญ๐บ | 1,953 | 131 | 0.3% |
Egypt ๐ช๐ฌ | 1,694 | 17 | 0.2% |
Malaysia ๐ฒ๐พ | 1,493 | 28 | 0.2% |
Israel ๐ฎ๐ฑ | 1,439 | 134 | 0.2% |
Russia ๐ท๐บ | 1,428 | 7 | 0.2% |
Sweden ๐ธ๐ช | 1,417 | 63 | 0.2% |
Romania ๐ท๐ด | 1,387 | 71 | 0.2% |
Jordan ๐ฏ๐ด | 1,359 | 100 | 0.2% |
Denmark ๐ฉ๐ฐ | 1,300 | 186 | 0.2% |
Bulgaria ๐ง๐ฌ | 1,073 | 152 | 0.2% |
Philippines ๐ต๐ญ | 1,048 | 9 | 0.1% |
Portugal ๐ต๐น | 1,025 | 81 | 0.1% |
Argentina ๐ฆ๐ท | 764 | 17 | 0.1% |
Pakistan ๐ต๐ฐ | 737 | 6 | 0.1% |
Morocco ๐ฒ๐ฆ | 734 | 6 | 0.1% |
Slovakia ๐ธ๐ฐ | 593 | 87 | 0.1% |
Honduras ๐ญ๐ณ | 514 | 53 | 0.1% |
Algeria ๐ฉ๐ฟ | 448 | 10 | 0.1% |
El Salvador ๐ธ๐ป | 429 | 66 | 0.1% |
Iran ๐ฎ๐ท | 414 | 5 | 0.1% |
Saudi Arabia ๐ธ๐ฆ | 409 | 12 | 0.1% |
Finland ๐ซ๐ฎ | 391 | 39 | 0.1% |
Dominican Republic ๐ฉ๐ด | 370 | 34 | 0.1% |
Peru ๐ต๐ช | 331 | 10 | 0.05% |
Singapore ๐ธ๐ฌ | 329 | 45 | 0.05% |
Bangladesh ๐ง๐ฉ | 301 | 2 | 0.04% |
Slovenia ๐ธ๐ฎ | 267 | 128 | 0.04% |
Uruguay ๐บ๐พ | 256 | 74 | 0.04% |
Yemen ๐พ๐ช | 253 | 8 | 0.04% |
Iraq ๐ฎ๐ถ | 216 | 5 | 0.03% |
Cambodia ๐ฐ๐ญ | 208 | 12 | 0.03% |
Cyprus ๐จ๐พ | 200 | 147 | 0.03% |
Panama ๐ต๐ฆ | 198 | 46 | 0.03% |
Luxembourg ๐ฑ๐บ | 195 | 244 | 0.03% |
Malta ๐ฒ๐น | 184 | 312 | 0.03% |
Indonesia ๐ฎ๐ฉ | 172 | 1 | 0.02% |
Cuba ๐จ๐บ | 163 | 14 | 0.02% |
Belarus ๐ง๐พ | 159 | 17 | 0.02% |
Senegal ๐ธ๐ณ | 155 | 8 | 0.02% |
Norway ๐ณ๐ด | 152 | 17 | 0.02% |
Lithuania ๐ฑ๐น | 148 | 37 | 0.02% |
Namibia ๐ณ๐ฆ | 145 | 55 | 0.02% |
New Zealand ๐ณ๐ฟ | 142 | 29 | 0.02% |
Estonia ๐ช๐ช | 130 | 98 | 0.02% |
Bolivia ๐ง๐ด | 120 | 10 | 0.02% |
Oman ๐ด๐ฒ | 109 | 21 | 0.02% |
Colombia ๐จ๐ด | 107 | 2 | 0.01% |
Kenya ๐ฐ๐ช | 106 | 2 | 0.01% |
Guatemala ๐ฌ๐น | 101 | 6 | 0.01% |
Croatia ๐ญ๐ท | 85 | 17 | 0.01% |
World total ๐ | 713,970 | 83 | 100.0% |
*1 megawatt = 1,000,000 watts.
China is the undisputed leader in solar installations, with over 35% of global capacity. What’s more, the country is showing no signs of slowing down. It has the worldโs largest wind and solar project in the pipeline, which could add another 400,000MW to its clean energy capacity.
Following China from afar is the U.S., which recently surpassed 100,000MW of solar power capacity after installing another 50,000MW in the first three months of 2021. Annual solar growth in the U.S. has averaged an impressive 42% over the last decade. Policies like the solar investment tax credit, which offers a 26% tax credit on residential and commercial solar systems, have helped propel the industry forward.
Although Australia hosts a fraction of Chinaโs solar capacity, it tops the per capita rankings due to its relatively low population of 26 million people. The Australian continent receives the highest amount of solar radiation of any continent, and over 30% of Australian households now have rooftop solar PV systems.
China: The Solar Champion
In 2020, President Xi Jinping stated that China aims to be carbon neutral by 2060, and the country is taking steps to get there.
China is a leader in the solar industry, and it seems to have cracked the code for the entire solar supply chain. In 2019, Chinese firms produced 66% of the worldโs polysilicon, the initial building block of silicon-based photovoltaic (PV) panels. Furthermore, more than three-quarters of solar cells came from China, along with 72% of the worldโs PV panels.
With that said, itโs no surprise that 5 of the worldโs 10 largest solar parks are in China, and it will likely continue to build more as it transitions to carbon neutrality.
Whatโs Driving the Rush for Solar Power?
The energy transition is a major factor in the rise of renewables, but solarโs growth is partly due to how cheap it has become over time. Solar energy costs have fallen exponentially over the last decade, and itโs now the cheapest source of new energy generation.
Since 2010, the cost of solar power has seen a 85% decrease, down from $0.28 to $0.04 per kWh. According to MIT researchers, economies of scale have been the single-largest factor in continuing the cost decline for the last decade. In other words, as the world installed and made more solar panels, production became cheaper and more efficient.
This year, solar costs are rising due to supply chain issues, but the rise is likely to be temporary as bottlenecks resolve.
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